REG - Franklin Global Tst - Final Results
17/04/2025 14:00
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RNS Number : 5174F Franklin Global Trust PLC 17 April 2025
Franklin Global Trust plc (the "Company")
(previously known as Martin Currie Global Portfolio Trust plc)
Legal Entity Identifier: 549300RKB85NFVSTBM94
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ANNUAL FINANCIAL RESULTS - YEAR TO 31 JANUARY 2025
The financial information set out below does not constitute the Company's
statutory accounts for the years ended 31 January 2025 or 2024 but is derived
from those accounts. Statutory accounts for 2024 have been delivered to the
Registrar of Companies and those for 2025 will be delivered following the
Company's annual general meeting.
The auditor has reported on those accounts; their report was unqualified.
The unedited full text of those parts of the annual report and accounts for
the year ended 31 January 2025 which are required to be published are set out
on the following pages.
The annual general meeting of the Company will be held on 19 June 2025. The
notice of meeting will shortly be issued to shareholders and a copy can be
downloaded on the Company's website (www.franklinglobaltrust.com
(http://www.franklinglobaltrust.com) ).
A copy of the full annual report and accounts will be submitted to the
National Storage Mechanism and will be available for inspection.
FINANCIAL HIGHLIGHTS
Key data
Year ended Year ended
31 January 2025 31 January 2024
Net asset value per share ('NAV')(1) 382.7p 360.5p
NAV total return(2) 7.3% 11.2%
Share price 381.0p 350.0p
Share price total return(2) 10.1% 11.1%
MSCI All Country World index (benchmark) total return(2,3) 23.7% 10.9%
Ongoing charges (as a percentage of shareholders' funds)(4) 0.65% 0.64%
Revenue return per share(5) 2.01p 2.37p
Dividend per share 4.20p 4.20p
Performance
· +7.3% Net asset value total return for the year.
· +10.1% Share price total return for the year.
· 4.20p Annual dividend per share
Past performance is not a guide to future returns. All returns are total
returns unless otherwise stated.
Source: Martin Currie Investment Management.
(1)The net asset value per share total return is calculated using the cum
income net asset value with dividends reinvested on the ex-dividend date. This
is an Alternative Performance Measure, see the annual report and accounts for
more details.
(2)Total return is the combined effect of the rise and fall in the share
price, net asset value or benchmark together with any dividend paid. See the
annual report and accounts for more details on Alternative Performance
Measures.
(3) The benchmark with effect from 1 February 2020 is the MSCI All Country
World index. Prior to this, the benchmark was the FTSE World index to 31
January 2020. Prior to this, the benchmark was the FTSE All-Share to 31 May
2011.
(4) Ongoing charges (as a percentage of shareholders' funds) are calculated
using average net assets over the period. The ongoing charges figure has
been calculated in line with the Association of Investment Companies ('AIC')
recommended methodology. This is an Alternative Performance Measure, see the
annual report and accounts for more details.
(5) For details of calculation, refer to note 5 in the annual report and
accounts.
CHAIR'S STATEMENT
Dear Shareholder
The Company celebrated its twenty fifth year of existence in its present form
during the financial year. On 26 September 2024, I was honoured to open the
London Stock Exchange and make a short speech to mark the occasion. As can
be seen on page 4 of the annual report, shareholders have enjoyed good returns
over the quarter century.
However, nothing stays the same forever and we now feel it is the right time
to relaunch your Company as Franklin Global Trust plc; this marks a pivotal
moment in the evolution of the Company. This change reflects a series of
positive developments aimed at delivering enhanced shareholder returns which I
outline below. Before turning to these matters, I would like to cover the
Company's performance for the financial year.
Performance and returns
A positive share price total return of 10.1% has been achieved over the
financial year to 31 January 2025 alongside a Net Asset Value ('NAV') total
return of 7.3%. While positive, this lagged the benchmark return of 23.7%.
Although we are glad to see the increase in NAV the Board is clearly
disappointed by the relative performance achieved during the year and Franklin
Templeton are well aware of our feelings on the matter. We welcome the
additional resources that are being made available to the investment team as
outlined in Enhanced Investment Team below and trust that these will help the
Company to achieve improved investment performance going forward. The Board
is pleased with the reduction in fund management fees that have been
negotiated with the manager as referred to in Management Fees below and we
have also been seeking other cost reductions from external service providers.
I was in contact with the largest shareholders around the end of the financial
year and we welcome engagement with all owners of the Company.
It has been a year when there has been considerable commentary about activist
investors and investment trust discount levels. Against this backdrop it is
particularly relevant that your Company continues to operate a zero discount
policy which enables investors to buy and sell the shares at a level close to
NAV in normal market conditions.
It is clearly the case that active managers have struggled to better the
returns achieved by global indices in recent periods as the very largest US
companies have performed so strongly. It is also true that investment trends
such as these always come to an end although it is difficult to predict the
precise events that will trigger such a change in leadership.
Enhanced Investment Team
Franklin Global Trust plc will continue to hold a concentrated portfolio of
25-40 growth stocks. However the inputs into the Company's investment
process will be deepened. The existing team of nine will now be part of the
Franklin Equity Group of sixty five investment professionals, including
analysts and sector specialists, based in San Mateo, New York and London as
well as Edinburgh. Zehrid Osmani and his present colleagues will join in the
Franklin Equity Group's daily meetings, have greater access to senior company
management at potential investee companies and benefit from a significantly
larger research budget. The combined team will now be managing over £110
billion of assets in total.
Management Fees
In February 2025 we agreed with Franklin Templeton Investment Trust Management
Limited that, with effect from 1 March 2025, the investment management fee
would be reduced from 0.45% to 0.40% of NAV (excluding income)(1) per annum.
The new fee level will maintain a competitive ongoing charge and contribute to
increasing shareholder value.
Income and Dividends
Net revenue earnings per share for the period amounted to 2.01 pence. The
Company has paid three interim dividends of 0.9 pence per share and will pay a
fourth interim dividend of 1.5 pence per share on 30 April 2025 to
shareholders on the register on 4 April 2025. The total dividends with respect
to the year to 31 January 2025 will be 4.2 pence per share, maintaining the
same total dividend as the previous year.
Capital growth is the primary focus of our investment manager and the
investment strategy is not constrained by any income target. Nevertheless, the
Board recognises that dividends are important for many shareholders and hence
continues to maintain the Company's dividend in line with previous levels.
The Company's Articles of Association permit the distribution of realised
capital gains and the Company has substantial distributable reserves. The
Board has again used these alongside revenue earnings to maintain the
dividend, while not impinging on the investment manager's approach to managing
the portfolio.
Gearing
In the light of the outlook for markets and the fact we operate a zero
discount policy we took the decision to remove our gearing. Therefore in
November 2024 the Company's £10m debt facility was repaid in full and closed.
Board
We announced on 5 March 2025 that Krishna Shanmuganathan had been appointed as
a Director with effect from 1 April 2025. Krishna is chair of both abrdn Asia
Focus plc and Weiss Korea Opportunities Fund. He has had a varied and
successful career in diplomacy, asset management, consulting and corporate
advisory, with a particular focus on Asia.
Gary Le Sueur will retire from the Board at the conclusion of this year's
Annual General Meeting ('AGM'), having served as a Director since December
2016. Gary is an experienced investor and I would like to thank him on behalf
of the Board and shareholders for his invaluable insights into the management
of your Company.
AGM
I am pleased to invite all shareholders to attend our AGM in person at the
offices of Franklin Templeton, 5 Morrison Street, Edinburgh EH3 8BH on
Thursday 19 June 2025 at 11.30am. We do recognise that some shareholders may
be unable to come to the AGM and if you have any questions about the annual
report, the investment portfolio or any other matter relevant to the Company,
please write to me either via email at ftcosec@franklintempleton.com
(mailto:ftcosec@franklintempleton.com) or by post to The Company Secretary,
Franklin Global Trust plc, 5 Morrison Street Edinburgh EH3 8BH. If you are
unable to attend, I urge you to submit your proxy votes in good time for the
meeting, following the instructions enclosed with the proxy form.
Stay in touch
Visit our new website at www.franklinglobaltrust.com where you can see the
latest information, a variety of manager updates, stock story videos that
showcase companies in our portfolio, webinars, events and much more. Our
monthly emails deliver all of the updates to your inbox, so I recommend you
subscribe today if you have not already done so.
The Board is always interested to hear shareholders' views. Please contact
me if you have any questions or points regarding your Company by email at:
ftcosec@franklintempleton.com.
Outlook
The period since the Company's year end has been volatile as markets seek to
adapt to the ever changing picture on tariffs and their effect on global
economies. It is difficult to predict the outcomes with any degree of
certainty. However, the Board will continue to monitor the investment
performance closely. As the Company evolves into Franklin Global Trust plc,
we enter a new chapter. I thank all shareholders for their ongoing loyalty and
believe that the actions taken will prove beneficial. We look forward to the
next chapter with cautious optimism, trusting that the enhancements to our
investment team will generate long-term value for our shareholders.
Christopher Metcalfe
Chair
17 April 2025
(1)For the purposes of calculating management fees, current period net income
is excluded from the calculation of asset value.
MANAGER'S REVIEW
Overview of the year to 31 January 2025
The return that we produced for shareholders over the last financial year was
disappointing. The NAV total return was +7.3%(1), whilst the MSCI World index
returned +23.7%. The market was unusually concentrated during the period, with
the 'Magnificent 7'(2) accounting for c. 35% of the performance of the index.
We do not follow any index in selecting the 25-40 stocks in our portfolio and
invest for the long term in quality growth companies that have superior
returns and growth profiles, and have leadership positions in the areas that
they operate in. We do not respond to short-term events. Our performance
was affected by a combination of (i) a sizeable underweight to the US equity
market, which was the strongest performing large region, (ii) by an overweight
to European equities, which were amongst the weakest regional markets, and
(iii) by an under-exposure to the 'Magnificent 7'. Regionally, our robust and
consistent valuation discipline has led us to find more opportunities in
Europe in particular, given the valuation differential vs the US. China was a
relatively weak market over the period, and our underweight to that region
proved to be correct.
The emphatic win by Donald Trump in the US elections in November further
extended a rally in US equities on the basis of investors' belief in US
exceptionalism. This further weighed on relative performance, given our
underweight in US equities. However, as set out under our discussion of the
outlook below, the level of uncertainty in the market, and therefore the
volatility, has spiked up considerably as a result of a broad range of tariff
announcements on the USA's trading partners following the financial year end.
The 'Magnificent 7' were important contributors to the performance of the US
and the Global markets last year, as the Artificial Intelligence ('AI')
opportunity was seen as supporting these companies' earnings outlook. Whilst
we had sizeable exposure to the strongest performing stock, Nvidia, which
alone accounted for 10% of the index's performance, and Microsoft, others in
that group performed strongly as well. During the year, as we evolved our
analysis on many of these large capitalisation technology companies, we
purchased positions in Apple and in Meta Platforms ('Meta'), which are
discussed further below. We continue to see the semiconductor industry as well
positioned to harness the AI investment cycle, given the growing need for more
and faster microchips.
Key contributors to relative performance
Only four sectors outperformed the broader benchmark during the year, namely
Telecoms (+41%), Financials (+34%), Consumer Discretionary (+32%) and
Technology (+29%). The weakest sectors were Materials (+4%), Energy (+7%),
Health Care (+7%) and Staples (+9%). Our sizeable overweight to Health Care
weighed on our performance, as post-covid normalisation in trends continued to
impact the growth of many of our holdings. Further, Novo Nordisk had specific
issues (see below). The Consumer sector has also been an area of weakness for
the portfolio, given our exposure to luxury goods companies (Kering and
Moncler) and cosmetics companies (L'Oréal and Estée Lauder). We have had
good exposure to the semiconductor industry, notably through Nvidia, although
the sector was volatile during the year as a result of ongoing geopolitical
uncertainty and the growing effects of restrictions imposed on China from the
US Chips and Science Act which was introduced in 2022.
Nvidia was up very strongly over the period, with a series of snippets
confirming that the semiconductor supply chain supporting high technology
chips remained tight. Nvidia beat sales and earnings forecasts throughout the
period and also raised future earnings projections. Early in the period, the
annual Nvidia GTC conference - an AI conference for developers - showcased
Nvidia's new product portfolio with the Grace-Blackwell Superchip. This
reinforced investors' perception of its strong lead against competitors, with
the gap widening in our view.
Adyen's strong performance was driven by a sustained rebound in topline
growth, which has remained above 20% for five consecutive quarters following
its unexpected slowdown to 18% in the first half of 2023. This recovery
reinforces our conviction in Adyen's vast market opportunity, disciplined
pricing strategy, and the unsustainable nature of a competitor-led price war.
We continue to believe that Adyen's best-in-class, in-house developed
technology is a unique advantage. In a highly competitive and fast-evolving
landscape, Adyen's ability to innovate remains essential to maintaining its
long-term leadership.
Constellation Software is a Canadian serial acquirer that operates thousands
of portfolio companies, each providing mission-critical market software to a
diverse customer base. The company's strong share performance was driven by
its disciplined execution as an expert capital allocator, with maximizing
long-term shareholder value at the core of its decision-making. Over time, we
believe that the broader investment community will increasingly recognise
Constellation's unique business model and exceptional corporate culture.
Key stock detractors from performance
Novo Nordisk - Novo Nordisk's recent share price decline stems from weight
loss drug Cagrisema's trial results, which showed weight loss at the lower end
of expectations but still ahead of prior-generation drugs. The company cited
an issue with the design of the trial that may have limited the drug's full
potential, prompting a follow-up which will take around 12 months to complete.
While this raises questions around management's execution, Novo remains
well-positioned in the growing obesity market, and its late 2026 launch
timeline for Cagrisema remains unchanged. Readouts for other drugs came in at
the high end of expectations, and while less significant than the Cagrisema
data, do go some way to restoring confidence in Novo's market leadership in
our opinion.
Estée Lauder was a detractor from performance in 2025 due to continued
weakness in China and the broader prestige beauty market, particularly in
Asia. The company faced ongoing demand challenges, and signalled near-term
pressure on earnings. Additionally, the announcement of an internal successor
as CEO was met with disappointment, as investors had hoped for fresh
leadership to drive a stronger turnaround.
L'Oréal also faced weakening consumer demand in China and the rest of Asia.
L'Oréal's management had anticipated an improvement by summer 2023 but this
has yet to materialise. Increased competition from both premium and emerging
local brands, along with foreign exchange headwinds and inflationary
pressures, plus a higher tax charge also weighed on performance. While these
near-term challenges have pressured the share price, L'Oréal's strong brand
portfolio and long-term growth potential remain attractive.
Changes to the portfolio
We constantly stress-test our conviction in the companies held in the
portfolio to ensure that they continue to remain innovative and stay away from
threats in what will be an evermore disruptive environment for the foreseeable
future. This is the reason why we moved some exposures around. In the consumer
and industrial sectors we exited Nike, Estée Lauder, Pernod Ricard, and
reduced the holdings in Kering and Croda, and purchased Deckers and Chipotle.
In the technology sector we added companies to capture a broader range of
exposures (Meta Platforms, Apple, Constellation Software and BE Semiconductors
('BESI')). In financials during the year we added Partners Group.
Purchases
We see favourable industry dynamics within private asset managers, with a
strong growth profile from increasing wealth and high barriers to entry.
Partners Group is a Swiss high-quality private asset manager with a management
team with long experience and proven track record of generating good returns
through the cycle. The company is well placed to benefit from the secular
trend which we foresee in the private equity space, given its robust
investment approach, consistent track record and a hard-to-replicate product
offering that appeals to both large institutional investors and private wealth
customers.
Novo Nordisk is a pure-play pharmaceutical company focused on diabetes,
obesity and 'Bio-pharma', which has typically grown organically through
research & development. Diabetes is a structural growth category which has
a stable, low competition market structure because of (i) manufacturing scale,
(ii) net price discounts and (iii) intellectual property protection. Obesity
is expected to be the largest drug category of all time by 2030. Novo Nordisk
is expected to deliver sales growth ahead of the peer group, with industry
leading margins.
BESI, a leader in semiconductor packaging technology, is a beneficiary of the
ongoing need for miniaturisation despite the physical challenges of doing so.
Next generation semiconductor designs are gaining traction with Intel, TSMC
and Samsung, who are all investing materially more into semiconductor
packaging after decades of neglect. The apex of this opportunity centres on
die-to-wafer hybrid bonding, where we believe that BESI has a multi-year head
start over its competitors. We expect this product line to progress from zero
to over 50% of the BESI business in the long term. We also believe it to be
significantly accretive to earnings.
Apple is the world's leading brand for consumer technology products. Apple's
integration of hardware and software expertise allows it to create world class
consumer experiences and high barriers to entry. We expect the digital and
real world only to become more integrated through time, with Apple's products
as a key interface. We may not know the exact form but see upside
opportunities in Virtual/Augmented Reality and AI. We believe that the company
should enjoy increasing earnings as AI features are released.
Deckers is a US company where we have high conviction in the momentum of the
underlying key brands in HOKA and the managed growth of UGG. The business is
very profitable today, with the mix improving as HOKA grows. The combination
of high margins and outsourced manufacturing fuels high returns.
Chipotle is a Mexican themed fast-casual restaurant chain that serves fresh,
high-quality meals. It is primarily a US based business with a small
international presence. Chipotle operates an ownership model as opposed to
franchise. It is a top 10 player in the US, benefits from favourable
demographics, strong brand perception as well as strong returns.
Meta is the owner of market leading social media assets in Facebook,
Instagram, and WhatsApp. The company is the dominant force in social media in
the US and beyond and is an early beneficiary from AI driving its share of
advertising as well as augmenting the user experience on its platforms. We
believe that the combination of these two factors underpins accelerated
growth.
We have been looking for an entry point in Constellation Software for some
time and took advantage of a pullback in the share price. We see the stock as
a compounder and expect the company to remain extremely disciplined on the
price paid for acquisitions.
Exits
We exited our position in Adobe due to uncertainty over Adobe's long term
competitive advantage due the disruptive threat of generative AI.
Nike's poor 2024 results led to a significant downgrade of expectations. Our
previous conviction in Nike shifting profitability higher while growing market
share diminished and so we exited the stock.
For Pernod Ricard, our business model conviction has lowered and we switched
to Chipotle.
Concerns around the global beauty market and exposure to China at Estée
Lauder resulted in guidance being withdrawn and consensus estimates being cut.
We sold out of Assa Abloy following a spell of strong share price movement
which led to us taking profits.
Our conviction in Croda reduced as a result of the ongoing weaker trading
environment and a challenging backdrop for the company. We exited the
holding after the financial year end.
Outlook for 2025 and beyond
There is plenty of uncertainty on all fronts as a result of the Trump
administration's unpredictable policy initiatives both domestically and
internationally. The Trump presidency and notably the introduction of trade
tariffs by the US directly impacts the magnitude of all five key risks that we
foresee for 2025. These are: 1) stickier inflation, 2) less dovish monetary
policies, 3) tariffs and trade wars, 4) geopolitical uncertainty in the Middle
East, Ukraine and China/Taiwan, and 5) government debt and fiscal policies
With the announcement by the Trump administration initially on 2 April 2025 of
a more significant and broader range of tariffs than expected across a wide
range of trading partners, and ensuing escalations with China, we believe that
there is an increased risk of a sharp slowdown in economic momentum this year
if the announced tariffs are not reversed. A lot of the predictions for the
remainder of 2025 will need to be reviewed in light of these and any further
policy initiatives by the new Trump administration. Whilst we do not expect
a full recession, the sharp slowdown which we expect could feel recessionary
in the US, Europe and China. We are already seeing a rapid deterioration in
both business and consumer confidence in the US, which could weigh negatively
on economic momentum. This could translate into weaker corporate earnings
growth, and a series of downgrades to market estimates. This will likely
maintain a high degree of uncertainty in equity markets, whilst at the same
time keeping share price volatility high. Investors need to be cognizant
that there will be a heightened focus on shorter term considerations, although
this could also open up more opportunities for investors with a longer term
perspective.
Tariffs, trade tensions, and geopolitical moves by the Trump administration
could bring significant volatility in equity and bond markets during the year.
It will therefore be important to continue to focus on long-term structural
growth opportunities, whilst maintaining valuation discipline. This will not
necessarily bring consistently strong performance in what will likely be a
very volatile environment, reacting to headline news and policy announcements.
However, we are confident that over the medium term the market will realise
that the companies which we hold are well positioned to harness the structural
opportunities that we have identified and deserve to be rerated.
Our three seismic thematic opportunities remain unchanged, namely: Energy
transition, Ageing population and Artificial intelligence.
Energy transition remains an important driver of investment initiatives
globally, both funded by governments and the private sector, with corporates
being keen to reduce their carbon intensity. Whilst the Trump administration
might de-emphasise this theme, we believe that corporates will continue to
carry the initiative forward. It is critical for them, and for willing
governments, to do so. Climate change has become a major risk for everyone,
given the potential cost to corporates, governments and households. We
therefore believe that (i) green and alternative energy, (ii) energy efficient
infrastructure and (iii) electric transportation, will remain good sources of
investment opportunities. We harness this view through companies such as
construction materials company Kingspan, a leader in panel insulation,
industrial company Atlas Copco, a provider of equipment to roll out energy
infrastructure projects, and companies such as Hexagon and Autodesk in the
industrial technology and automation segments. Linde in the industrial gases
also has an interesting exposure to energy transition. In total, we calculate
that Franklin Global Trust has c.14% of its portfolio exposed to this theme.
The trend of ageing population is now being experienced not only by developed
markets, but also some developing markets. Notably the Chinese population
has now peaked and is trending toward ageing. The risk is that the theme of
the emerging Chinese middle-class becomes superseded by the ageing of the
country's population. The need for healthcare infrastructure, in a world that
is ageing at an accelerating rate, is therefore apparent.
We have in the portfolio several companies that harness that theme, for
example Illumina in the genomics segment, CSL in the plasma collection
segment, Mettler Toledo in the medical instruments area, and Coloplast, a
leader in urology. Veeva Systems, a leader in hospital software, is also a
company that is well positioned to harness the drive towards more efficient
R&D management. Sartorius Stedim, as a leader in drug development and
outsourcing, is well positioned to capture the ongoing spend by pharmaceutical
companies on R&D. Obesity is likely to remain a prevalent trend in today's
society. Whilst Novo Nordisk has suffered from a significant pullback, we
believe that the market price of its shares fails to capture the superior
growth and returns characteristics that the obesity market segment can achieve
for well established leaders. ResMed, as a leader in devices that tackle sleep
apnea, is also well placed to harness the co-morbidity related to obesity.
Altogether, the portfolio's exposure to ageing population accounts for c.20%
of the assets.
We expect that the theme of AI will remain omnipresent for the next decade and
beyond, providing a fertile ground for investment opportunities. However, this
area also highlights the need to have valuation discipline, as it is at risk
of share price bubbles. At this stage, we note that the Hyperscalers are not
only continuing to spend significantly, but are actually increasing their
capex intentions further. Alphabet, Amazon, Meta, Microsoft and Apple are
expected to spend a combined $2trn in 2025, and over the next 4 years the
cumulative capex of the big technology companies is expected to reach $9.3trn.
This is a figure that can appear colossal, but that highlights the magnitude
of the investment cycle triggered by the AI opportunity that we are observing.
For the time being, Hyperscalers have been able to balance their drive to
invest more whilst returning cash to shareholders, all of which has been
funded by their strong cash flow generation. This makes us comfortable that,
unlike the bubble of 2000, the technology companies that are investing heavily
on this occasion have solid balance sheets, and are self-funded.
The emergence of DeepSeek at the start of 2025 brought some volatility to the
share prices of some of the Hyperscalers, as the initial evidence of DeepSeek
being significantly cheaper than the models developed by the Hyperscalers led
to concerns of overspending. The markets, however, quickly moved to a point
that recognised that technology has always grappled with disinflationary
disruptive trends, as new technologies emerge at a fraction of the previous
costs. We forecast AI to be on the cusp of triggering a major technologically
driven Industrial Revolution, unleashing a major cycle of productivity
enhancement for corporates, innovation breakthroughs, and major disruption to
any existing businesses that fail to harness the AI opportunity. AI will
potentially enhance productivity. Whether companies benefit from a boost in
productivity through higher margins, or have to pass these gains to their
customers will depend on the competitive dynamics of the industries in which
they operate, the new entrant risks, the disruption risks, and the pricing
power that they possess. All of these factors are important to assess when
analysing any business model, which is what we do systematically when
considering an investment opportunity or reviewing an existing holding.
Overall, we calculate that the portfolio has c.31% of its assets exposed to
the AI theme, through companies such as Nvidia, Microsoft, BE Semiconductors,
ASML, Atlas Copco, Cadence, Meta and Apple.
We are excited about the shape of the portfolio as it currently stands. Our
concentrated approach, focusing on our strongest convictions that come out of
our research process, leads to a collection of companies (i) which have solid
balance sheets; (ii) which we are forecasting to grow their sales at a
significantly higher rate than listed companies in general; and (iii) which
have high returns on invested capital. These are characteristics that will
help companies weather the upcoming storms around a potentially deteriorating
economic cycle, as a result of the uncertainties brought by the new tariff
announcements of 2 April 2025. Importantly, these are also companies that
can continue to innovate, to stay ahead of their competitors, and to fend off
disruption risks, in a decade ahead that will continue to be disruptive for
many industries.
Turning to valuations, while it is true that our portfolio, in aggregate,
trades at a higher PE ratio than the benchmark index, any measure capturing
the superior growth and returns profile of our portfolio would conclude that
it is attractively valued when adjusting for this profile.
Our portfolio offers our shareholders a collection of companies with higher
growth than the index, in terms of sales, earnings and cash flow, and a
substantially higher ROIC, with a forecast of a rapidly improving ROIC over
time. This group of investments should therefore in our view compound
attractively over the coming years, as the companies which we hold keep
delivering what we forecast them to be able to deliver.
Finally, our team will move into the Franklin Equity Group in 2025. We will
integrate with a larger group of investors managing over £110bn and sharing
the same investment philosophy, focusing on quality growth opportunities. This
will give us access to more analytical resources, notably we will be part of a
team of 65 investment professionals, including a well-resourced central
research group with over thirty analysts from whose knowledge, expertise and
insights we will be able to benefit. The group is based in Silicon Valley, and
the combined team also has offices in New York, London and Edinburgh, which
will permit us to extend our network of corporates and leaders of industry
within a region thriving on innovation. This move is intended to help us to
continue to position the Company to focus on promising structural growth
opportunities. I look at this prospect with excitement and the strong belief
that we will be able to deliver the right outcome for our shareholders as we
complete our integration into the broader Franklin Equity Group.
Zehrid Osmani
Portfolio Manager
17 April 2025
(1)All performance statistics total return: see Alternative Performance
Measures
(2)The so-called 'Magnificent 7' stocks which are believed to be key
beneficiaries of the growing adoption of AI are Apple, Microsoft, Alphabet,
Amazon, Nvidia, Meta and Tesla.
(3)Graphics Processing Units
Portfolio summary
By sector
31 January 2025 31 January 2024 MSCI All Country World index %
31 January 2025 MSCI All Country World index % 31 January 2024
Company % Company %
Information Technology 30.7 24.9 30.8 23.5
Health Care 25.7 9.9 22.8 11.4
Consumer Discretionary 14.7 11.5 12.0 10.8
Financials 9.7 17.2 7.2 16.0
Materials 6.0 3.5 7.7 4.2
Industrials 5.7 10.3 12.2 10.6
Communication Services 4.1 8.6 - 7.5
Consumer Staples 3.4 5.8 7.3 6.7
Energy - 3.8 - 4.5
Utilities - 2.5 - 2.5
Real Estate - 2.0 - 2.3
100.0 100.0 100.0 100.0
By asset class
31 January 2025 % 31 January 2024 %
Equities 99.2 103.1
Cash 0.8 0.8
Less borrowings - (3.9)
100.0 100.0
Portfolio distribution by region
31 January 2025 31 January 2024 MSCI All Country World index %
31 January 2025 MSCI All Country World index % 31 January 2024
Company % Company %
North America 56.8 69.1 52.2 66.0
Developed Europe 40.8 13.9 44.4 15.6
Developed Asia Pacific ex Japan 2.4 2.3 3.4 2.6
Global Emerging Markets - 9.7 - 10.0
Japan - 4.8 - 5.6
Middle East - 0.2 - 0.2
100.0 100.0 100.0 100.0
Portfolio holdings as at 31 January 2025
Market value % of total
Sector Country £000 portfolio
North America 130,990 56.8
Nvidia Information Technology United States 14,930 6.5
Microsoft Information Technology United States 12,515 5.4
Linde Materials United States 10,645 4.6
Mastercard Financials United States 9,820 4.3
Meta Platforms Communication Services United States 9,519 4.1
Apple Information Technology United States 8,689 3.8
Deckers Outdoor Consumer Discretionary United States 8,247 3.6
ResMed Health Care United States 7,756 3.4
Veeva Systems Health Care United States 6,797 2.9
Cadence Design Systems Information Technology United States 6,550 2.8
Zoetis Health Care United States 6,371 2.8
Illumina Health Care United States 5,357 2.3
Autodesk Information Technology United States 5,307 2.3
Mettler Toledo Health Care United States 5,016 2.2
Constellation Software Information Technology Canada 4,789 2.1
IDEXX Laboratories Health Care United States 4,479 1.9
Chipotle Mexican Grill Consumer Discretionary United States 4,203 1.8
Developed Europe 93,803 40.8
Ferrari Consumer Discretionary Italy 10,187 4.4
Moncler Consumer Discretionary Italy 8,793 3.8
ASML Holding Information Technology Netherlands 8,553 3.7
Sartorius Stedim Biotech Health Care France 8,258 3.6
Atlas Copco Industrials Sweden 7,734 3.4
L'Oreal Consumer Staples France 7,729 3.4
Novo Nordisk Health Care Denmark 7,436 3.2
Adyen Financials Netherlands 7,012 3.0
Hexagon Information Technology Sweden 5,500 2.4
Partners Group Holding Financials Switzerland 5,426 2.4
Kingspan Group Industrials Ireland 5,420 2.3
BE Semiconductors Industries Information Technology Netherlands 3,827 1.7
Croda International Materials United Kingdom 3,163 1.4
Kering Consumer Discretionary France 2,467 1.1
Coloplast B Health Care Denmark 2,298 1.0
Developed Asia Pacific ex Japan 5,482 2.4
CSL Health Care Australia 5,482 2.4
Total portfolio holdings 230,275 100.0
LARGEST 10 HOLDINGS
31 January 2025 31 January 2025 31 January 2024 31 January 2024
Market value % of total Market value % of total
£000 portfolio £000 portfolio
Nvidia 14,930 6.5 24,357 9.2
Microsoft 12,515 5.4 17,136 6.5
Linde 10,645 4.6 13,818 5.2
Ferrari 10,187 4.4 11,792 4.5
Mastercard 9,820 4.3 11,341 4.3
Meta Platforms 9,519 4.1 - -
Moncler 8,793 3.8 10,341 3.9
Apple 8,689 3.8 - -
ASML Holding 8,553 3.7 14,074 5.3
Sartorius Stedim Biotech 8,258 3.6 7,645 2.9
As at 31 January 2025 the largest 10 holdings accounted for 44.2% of the
portfolio (51.0% as at 31 January 2024).
Largest 10 holdings in detail
Nvidia
Information Technology, United States
The company designs graphics processing units for gaming and professional
markets. We see long-term upside optionality in several secular growth areas,
including Gaming, Cloud, AI and Autonomous Vehicles. We believe the market is
missing the longevity of growth at Nvidia - specifically from referencing and
Edge AI.
Microsoft
Information Technology, United States
US software company Microsoft, best known for its Windows operating system,
the Xbox gaming console and cloud computing service Azure, is in a prime
position to benefit from a new 'golden era' of investment in technology. IT
investment is becoming crucial for every aspect of corporate life, and
Microsoft stands to capture a significant share of this growing expenditure.
Furthermore, it can leverage the power of cross-selling within its extensive
Enterprise customer base, allowing its Intelligence Cloud division to become
the largest
contributor to the business over the long term, in our view.
Linde
Materials, United States
A resilient and geographically diverse business, it has high exposure to
fast-growing emerging markets, combined with a solid base in the Americas.
Linde exerts strong pricing power from its leading positions in the regions in
which it operates. Although revenue growth is correlated to global industrial
production, the structure of client contracts using 'take-or-pay' means that
revenues are relatively cushioned during economic downturns. The merger with
Praxair has accelerated a strategy of focusing on less economically sensitive
customers in the healthcare and food and beverage sectors. Our thesis rests on
its management's ability to continue to improve margins outside Americas and
exert pricing power on its expanded customer base.
Ferrari
Consumer Discretionary, Italy
The Italian sports car manufacturer provides a unique play on the global
growth of high-net-worth individuals and their passion for speed. It has
enviable pricing power, thanks to the high demand for their products, limited
production and its loyal customer base. Greater use of their Special Service
and Icona ultra-high end platforms gives Ferrari the ability to raise their
average selling price, which is already at a sizeable premium to other luxury
car manufacturers. With good geographic diversification and higher exposure to
the US and Europe, buoyant and resilient end-user market demand over the long
term, and the ability to steadily increase its profit margins and
return profiles, we are confident in the long term growth trajectory of
Ferrari.
Mastercard
Financials, United States
The migration from cash and cheque to electronic payment is a multi-year
secular trend that is still far from mature. While this is a
seemingly consensual proposition, the market tends to underestimate this
trend. The company's ROIC is highly attractive, even though the electronic
payment space is competitive, its transition from a pure card network to a
multi-rail provider of payment solutions proves how the company can face these
challenges from a position of strength.
Meta Platforms
Communication Services, United States
The company is the dominant force in social media in the US and beyond. It is
an early beneficiary from AI driving its share of advertising as well as
augmenting the user experience on its platforms. We believe that the
combination of these two factors underpins accelerated growth over our
forecast period.
Moncler
Consumer Discretionary, Italy
Moncler is the leader in super premium down jackets and has a rich heritage
and strategic focus on long-term sustainable and responsible growth. Moncler's
CEO Remo Ruffini has been forensically focused on creating demand for scarce
product and cementing this with great customer experiences, enabling the
business to expand in a significantly underpenetrated market. We believe that
the structural growth potential of the company is attractive, and its ability
to continue to innovate remains strong.
Apple
Information Technology, United States
Apple is the global leading brand for technology products across the iPhone,
iPad, Mac, and Apple Watch, which are priced a premium to peers due to the
companies' brand value in product design and user experience. Apple's
integration of hardware and software expertise create world class consumer
experiences and high barriers to entry. In addition, its brand reputation and
ecosystem of products allows cross sell with services such as Music, Apple
Arcade, Apple TV and Apple Pay. We expect the digital and real world only to
become more integrated through time, with Apple's products as a key interface.
ASML Holding
Information Technology, Netherlands
This semiconductor equipment company holds a monopoly position in leading edge
lithography equipment for semiconductors with high barriers to entry. This
dominant position affords the company strong pricing power. ASML is well
placed to benefit from increasingly complex and smaller node chipsets. In
addition, trailing edge demand, traditionally the sub growth segment, has
accelerated from electrification in automotive and IoT/industrials which
appear structural. As such we expect the ASML to outgrow the semiconductor
industry.
Sartorius Stedim Biotech
Health Care, France
Sartorius benefits from the shift of increasingly complex drug development and
drug production which is favouring life science and tools companies. We see
structural growth in Bioprocessing and within that Single Use Technologies
driving strong topline growth with high returns. In addition to those drivers
we see Sartorius as continuing to drive market share gains in the US as it
benefits from the new wave of biologic launches where it has been previously
locked out. With high barriers to entry and significant switching costs
Sartorius is a clear compounder, even though it can experience some degree of
cyclicality due to industry capacity cycles.
Key Performance Indicators and Performance
The Board uses certain key performance indicators ('KPIs') to monitor and
assess its performance in achieving the Company's objectives. The Board have
made no changes to the KPI targets in the financial year to 31 January 2023.
KPI Target 2024 Achieved 2024 Achieved
1. Net asset value performance
relative to benchmark (over 3 years) Outperform (28.7%) No (24.4%) No
2. Performance against Company's peers (over 3 years)
Top third performance 9 out of 12 No 9 out of 13 No
3. Ongoing charges Less than 0.70% 0.65% Yes 0.64% Yes
1. Net asset value performance relative to benchmark
The Board assessed the net asset value total return compared to the benchmark.
It is measured on a financial year basis and assessed over a rolling three
year period. The benchmark with effect from 1 February 2020 is the MSCI All
Country World index. Prior to this, the benchmark was the FTSE World index.
The KPI was not achieved for the period. The return of the Company was 8.9%
and the benchmark 37.6% for the three years to 31
January 2025.
2. Performance against the Company's peers
The Board monitors the share price total return performance versus all
competitor funds within the AIC Global sector over a rolling three year
period.
The share price total return for the Company was 10.9% over the three years to
31 January 2025 which ranked 9 out of 12 in the AIC Global sector.
3. Ongoing charges
The Board monitors ongoing charges on a regular basis to ensure that it meets
its target by maintaining cost discipline and its focus on value adding
activities. The KPI was met for the year at 0.65%. The ongoing charges
figure has been calculated in line with the Association of Investment
Companies ('AIC') recommended methodology.
Principal and emerging risks and uncertainties
Risk and mitigation
The Company's business model is longstanding and resilient to most of the
short-term operational uncertainties that it faces. The Board believes that
these are effectively mitigated by the internal controls established by the
Board and by the AIFM, Franklin Templeton Investment Trust Management Limited,
and their combined oversight of the investment manager, as described in the
table below. Its principal risks and uncertainties are therefore largely
driven by the inherent uncertainties of investing in global equity markets.
The Board's process seeks to mitigate known risks and to identify new risks as
they emerge.
However, it is recognised that the likelihood and timing of crystallisation of
some risks, known and unknown, cannot be predicted and the Board then relies
on professional management, effective systems and communication to mitigate
and respond to them as and when they arise.
Operational and management risks are regularly monitored by the AIFM and by
the Board at Board meetings. As part of its annual strategy meeting the Board
carries out a robust assessment of the principal and emerging risks facing the
Company, including those that would threaten its business model, future
performance, solvency or liquidity.
The Board's planned mitigation measures for the principal and emerging risks
are described below.
The Board notes that the dominant global macroeconomic risks are geo-political
tensions, trade, inflation, and climate transition. These are however
considered to be risks that have an impact on the identified principal and
emerging risks and are therefore considered and managed in that context and
the investment manager takes full account of these risks in assembling and
monitoring the portfolio of investments.
Principal Risk Mitigation
Sustained investment underperformance The Board oversees the implementation of the investment strategy and monitors
the performance of the
investment portfolio. The portfolio manager attends all Board meetings and
reviews the portfolio with the Board together with data that shows statistical
measures of the Company's risk and return profile. Should there be sustained
investment underperformance despite reasonable mitigation measures taken by
the investment manager, the Board would assess the cause and take appropriate
action to manage this risk. The investment strategy is index ignorant and will
not track indices; it will therefore underperform in certain market conditions
and the Board will assess whether underperformance is due to market
conditions, poor manager performance or whether the strategy itself is
unsustainable. As set out in the Chair's Statement and Manager's Review,
Franklin Templeton is reorganising the team managing the Company's investments
to enhance resources available to the portfolio manager going forward.
There is increasing awareness of the challenges and emerging risks posed by
climate change. The investment process incorporates detailed analysis of ESG
issues and as set out in the Manager's review, this includes an assessment of
the potential impact of climate change. Overall, the specific potential
effects of climate change are difficult, if not impossible, to predict and to
measure and the Board and investment manager will continue to monitor
developments in this important risk area.
Geopolitical risks have always been an input into the investment process. This
risk area continues to be highlighted as a result of the Russian invasion of
Ukraine, with the resultant effects on global trade posed by
supply shocks, higher levels of inflation, and higher interest rates as
central banks seek to contain inflation and volatility in asset prices.
Further information on geopolitical risks is set out in the Outlook section of
the
Manager's review. The move by the United States to become more isolationist
and protectionist, and in particular the introduction of widespread tariffs,
may lead to reduced global trade, lower growth, higher inflation, increased
volatility and reductions in the values of international companies. While
global movements are likely to affect the portfolio, we seek to mitigate this
by having a portfolio which is diversified by geography and economic sector.
Material decline in market capitalisation of the Company The Board recognises that the zero discount policy allows new shareholders to
purchase shares and current shareholders to sell their shares at close to NAV,
in normal market conditions. Although this level of liquidity
encourages investment in the Company, it could also increase the risk of a
material decline in the size of the
Company. The Board monitors the performance and pace of share buybacks and the
Company's shareholder profile. Decline could also come as a consequence of the
Company's failure to meet its investment objective. The Board believes that
good long-term performance will mitigate this likelihood, increase demand for
the Company's shares and, subject to overall market stability, permit the
market capitalisation of the Company to increase.
Loss of s1158-9 tax status Loss of s1158-9 tax status would have serious consequences for the
attractiveness of the Company's shares.
The Board considers that, given the regular oversight of this risk by the
audit committee, the AIFM and the
investment manager, the likelihood of this risk occurring is minimal but as
the consequence of loss of the tax status would be very damaging it is
highlighted as a principal risk. The audit committee regularly reviews the
eligibility conditions and the Company's compliance against each, including
the minimum dividend requirements and shareholder composition for close
company status.
On the basis of its continual and ongoing assessment of the principal and
emerging risks facing the Company, and given its current position, the Board
is confident that the Company will be able to continue in operation and meet
its liabilities as they fall due. The Board believes that the processes of
internal control that the Company has adopted and oversight by the AIFM
continue to be effective.
Going concern status
The Company's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chairman's
statement, Manager's review, Strategic report and the Report of the directors.
The financial position of the Company as at 31 January 2025 is shown in the
statement of financial position. The statement of cash flow of the Company is
included in this announcement. Note 15 sets out the Company's risk management
policies, including those covering market risk, liquidity risk and credit
risk. In accordance with the 2019 AIC Code of Corporate Governance and the
2018 UK Corporate Governance Code, the Directors have undertaken a rigorous
review of the Company's ability to continue as a going concern. The Company's
assets consist of a diverse portfolio of listed equity shares which, in most
circumstances, are realisable within a very short timescale. The Directors
have analysed and reviewed the liquidity of the Company's portfolio under
normal market conditions as at 31 January 2025. The Directors are mindful of
the principal and emerging risks and uncertainties.
They have reviewed revenue forecasts for the next two financial years and
believe that the Company has adequate financial resources to continue its
operational existence for the period to 31 January 2027, which is at least 12
months from the date on which the financial statements are authorised for
issue. Accordingly, the Directors continue to adopt the going concern basis in
preparing these financial statements.
Viability statement
The Company's business model is designed to deliver long-term returns to its
shareholders through investment in large and liquid stocks in global equity
markets. Its plans are therefore based on having no fixed or limited life
provided that global equity markets continue to operate normally. The Board
has assessed the Company's viability over a three year period in accordance
with provision 31 of the UK Corporate Governance Code as it believes that this
is an appropriate period over which it does not expect there to be any
significant change to the principal risks and adequacy of the mitigating
controls in place. The Board considers that this reflects the minimum period
which should be considered in the context of the Company's long-term objective
but one which is limited by the inherent and increasing uncertainties involved
in assessment over a longer period.
In making this assessment the Directors have considered the following factors:
• the principal and emerging risks and
uncertainties and the mitigating actions, including specifically the current
geopolitical and economic environment;
• the mitigation measures which key service
providers including the AIFM have in place to maintain operational resilience;
• the challenges posed by climate change;
• the ongoing relevance of the Company's investment
objective in the current environment;
• the level of income forecast to be generated by
the Company and the liquidity of the Company's portfolio;
• the low level of fixed costs relative to the
Company's liquid assets;
• the expectation that in normal markets more than
98% of the current portfolio could be liquidated within two trading days; and
• when relevant, the quantity of debt and the
ability of the Company to make payments of interest and repayments of
principal on its debt on their due dates.
Based on the results of their analysis and the Company's processes for
monitoring each of the factors set out above, the Directors have a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over at least the next three years.
Responsibility statement
Each of the Directors confirms that to the best of their knowledge:
· the financial statements which have been prepared in accordance
with United Kingdom Generally Accepted Accounting Practice, including the
Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS
102) give a true and fair view of the assets, liabilities, financial position
and profit of the Company; and
· the Report of the directors, Strategic report and Manager's
review include a fair, balanced and understandable review of the development
and performance of the business and the position of the Company, together with
a description of the principal risks and the uncertainties that it faces; and
· the annual report and financial statements, taken as a whole, are
fair, balanced and understandable and provide the information necessary for
shareholders to assess the Company's performance, business model and strategy.
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice (and applicable law).
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or loss of the
Company for that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and explained in the
financial statements respectively; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements and the Directors'
remuneration report comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The financial statements are published on the Company's
website (www.franklinglobaltrust.com) which is maintained by the investment
manager. The Directors are responsible for the maintenance and integrity of
the Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
This responsibility statement was approved by the Board of Directors on 17
April 2025 and is signed on its behalf by the Chair, Christopher Metcalfe.
STATEMENT OF COMPREHENSIVE INCOME
Year to 31 January 2025 Year to 31 January 2024
Revenue Capital Total Revenue Capital Total
Note £000 £000 £000 £000 £000 £000
Net gains on investments 7 - 17,427 17,427 - 25,631 25,631
Net currency gains - 5 5 - - -
Revenue 2 2,419 - 2,419 2,832 - 2,832
Investment management fee(1) (226) (906) (1,132) (226) (904) (1,130)
Other expenses 3 (502) - (502) (468) - (468)
Net return on ordinary activities before finance costs and taxation
1,691 16,526 18,217 2,138 24,727 26,865
Finance costs 1(d) (110) (439) (549) (101) (400) (501)
Net return on ordinary activities before taxation
1,581 16,087 17,668 2,037 24,327 26,364
Taxation on ordinary activities 4 (251) - (251) (287) - (287)
Net return attributable to shareholders
1,330 16,087 17,417 1,750 24,327 26,077
Net return per Ordinary share 5 2.01p 24.36p 26.37p 2.37p 32.87p 35.24p
The total columns of this statement are the profit and loss accounts of the
Company.
The revenue and capital items are presented in accordance with the Association
of Investment Companies ('AIC') Statement of Recommended Practice 2022.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued in the year.
The notes below form part of these financial statements.
There is no other comprehensive income and therefore the return attributable
to shareholders is also the total comprehensive income for the period.
(1)The details of the investment management fee are provided in the Report of
the directors in the annual report and accounts.
STATEMENT OF FINANCIAL POSITION
As at 31 January 2025 As at 31 January 2024
Note £000 £000 £000 £000 £000 £000
Non-current assets
Investments at fair value through profit or loss
7 230,275 264,787
Current assets
Trade receivables 8 2,360 1,029
Cash and cash equivalents 9 1,900 1,922
4,260 2,951
Current liabilities
Trade payables 10 (2,309) (961)
Bank loan 10 - (10,000)
(2,309) (10,961)
Total net assets 232,226 256,777
Equity
Called up Ordinary share capital 11 4,934 4,934
Share premium account 11,823 11,823
Capital redemption reserve 11,083 11,083
Capital reserve, of which: 12 204,169 228,307
Realised capital reserve (distributable) 151,207 156,688
Unrealised gains on investments (undistributable)
52,962 71,619
Revenue reserve 217 630
Total shareholders' funds 232,226 256,777
Net asset value per Ordinary share 13 382.7p 360.5p
The notes below form part of these financial statements.
Franklin Global Trust plc is registered in Scotland, company number SC192761.
The financial statements were approved by the Board of directors on 17 April
2025 and signed on its behalf by Christopher Metcalfe, Chair.
STATEMENT OF CHANGES IN EQUITY
Called up Share Capital
Ordinary premium redemption Capital Revenue
share capital account reserve reserve reserve Total
Note £000 £000 £000 £000 £000 £000
As at 31 January 2024 4,934 11,823 11,083 228,307 630 256,777
Net return attributable to shareholders - - - 16,087 1,330 17,417
Ordinary shares bought back 11 - - - (39,184) - (39,184)
Dividends paid 6 - - - (1,041) (1,743) (2,784)
As at 31 January 2025 4,934 11,823 11,083 204,169 217 232,226
Called up Share Capital
Ordinary premium redemption Capital Revenue
share capital account reserve reserve reserve Total
Note £000 £000 £000 £000 £000 £000
As at 31 January 2023 4,934 11,424 11,083 221,463 864 249,768
Net return attributable to shareholders - - - 24,327 1,750 26,077
Ordinary shares issued 11 - 399 - 1,940 - 2,339
Ordinary shares bought back 11 - - - (18,305) - (18,305)
Dividends paid 6 - - - (1,118) (1,984) (3,102)
As at 31 January 2024 4,934 11,823 11,083 228,307 630 256,777
The notes below form part of these financial statements.
STATEMENT OF CASH FLOW
Year to 31 January 2025 Year to 31 January 2024
Note £000 £000 £000 £000
Cash flows from operating activities
Net return on ordinary activities before taxation 17,668 26,364
Adjustments for:
Gains on investments 7 (17,427) (25,631)
Finance costs 549 501
Dividend income recognised 2 (2,370) (2,790)
Interest income recognised 2 (49) (42)
Decrease in receivables 30 17
Increase/(decrease) in payables 58 (26)
Overseas withholding tax suffered 4 (251) (287)
(19,460) (28,258)
Net cash flows from operations (1,792) (1,894)
Interest received 49 42
Dividends received 2,362 2,732
2,411 2,774
Net cash flows from operating activities 619 880
Cash flows for investing activities
Purchases of investments (91,702) (80,424)
Sales of investments 144,065 119,657
Net cash flows from investing activities 52,363 39,233
Cash flows from financing activities
Repurchase of Ordinary share capital (39,541) (18,246)
Shares issued for cash - 2,339
Equity dividends paid 6 (2,784) (3,102)
Drawdown of bank loan - 10,000
Repayment of bank loan (10,000) (30,000)
Interest and fees paid on bank loan (679) (438)
Net cash flows from financing activities (53,004) (39,447)
Net (decrease)/increase in cash and cash equivalents (22) 666
Cash and cash equivalents at the start of the year 1,922 1,256
Cash and cash equivalents at the end of the year 1,900 1,922
Analysis of debt
As at As at
31 January 2024 Cash flows 31 January 2025
Note £000 £000 £000
Cash at bank 9 1,922 (22) 1,900
Bank loan 10 (10,000) 10,000 -
Net debt (8,078) 9,978 1,900
As at As at
31 January 2023 Cash flows 31 January 2024
Note £000 £000 £000
Cash at bank 9 1,256 666 1,922
Bank loan 10 (30,000) 20,000 (10,000)
Net debt (28,744) 20,666 (8,078)
The notes below form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
Note 1: Accounting policies
a) For the reporting period, the Company is applying FRS 102 Financial
Reporting Standard applicable in the UK and Republic of Ireland (FRS 102),
which forms part of the Generally Accepted Accounting Practice ('UK GAAP')
issued by the Financial Reporting Council ('FRC').
The Company's assets consist of a diverse portfolio of listed equity shares
which, in most circumstances, are realisable within a very short timescale.
The Directors are mindful of the principal and emerging risks and
uncertainties including those related to geopolitical risks and climate
considerations.
They have reviewed revenue forecasts for the next two financial years and
believe that the Company has adequate financial resources to continue its
operational existence for the period to 31 January 2027, which is at least 12
months from the date the financial statements are authorised for issue.
Accordingly, the Directors continue to adopt the going concern basis in
preparing these financial statements.
These financial statements have been prepared in accordance with the
Disclosure Guidance and Transparency Rules of the Financial Conduct Authority,
FRS102 issued by the FRC and the revised Statement of Recommended Practice
'Financial Statements of Investment Trust Companies and Venture Capital
Trusts' ('SORP') issued by the AIC in July 2022.
The Company is required to identify a functional currency, being the currency
in which the Company predominately operates. The Board has determined that
sterling is the Company's functional currency, which is also the currency in
which these financial statements are prepared. This is also the currency in
which all expenses and dividends are paid.
The Directors have considered the impact of climate change on the value of the
listed investments that the Company holds. In the view of the Directors, as
the portfolio consists of listed equities, their market prices should reflect
the impact, if any, of climate change and accordingly no adjustment has been
made to take account of climate change in the valuation of the portfolio in
these financial statements.
b) Income from investments (other than capital dividends), including
taxes deducted at source, is included in revenue by reference to the date on
which the investment is quoted ex-dividend, or where no ex-dividend date is
quoted, when the Company's right to receive payment is established. UK
investment income is stated net of the relevant tax credit. Overseas dividends
include any taxes deducted at source. Special dividends are credited to
capital or revenue, according to the circumstances.
c) Interest receivable and payable, investment management fees and
other expenses are measured on an accruals basis.
d) The investment management fee and finance costs in relation to debt
are recognised four-fifths as a capital item and one-fifth as a revenue item
in the statement of comprehensive income in accordance with the Board's
expected long-term split of returns in the form of capital gains and revenue,
respectively. Finance costs relate to interest and fees on bank loans and
overdrafts. All other expenses are charged to revenue except where they
directly relate to the acquisition or disposal of an investment, in which case
they are treated as described in (f) below. Full details of the investment
management fee are included in the Report of the directors in the annual
report and accounts.
e) Investments - investments have been classified upon initial
recognition at fair value through profit or loss. Investments are recognised
and derecognised at trade date where a purchase or sale is under a contract
whose terms require delivery within the time frame established by the market
concerned, and are initially measured at fair value. After initial
recognition, investments are valued at fair value. For listed investments,
this is deemed to be bid market prices. Gains and losses arising from changes
in fair value are included in net profit or loss for the year as a capital
item in the statement of comprehensive income and are ultimately recognised in
the capital reserve.
f) Transaction costs incurred on the purchase and disposal of
investments are recognised as a capital item in the statement of comprehensive
income.
g) Monetary assets and liabilities expressed in foreign currencies are
translated into sterling at rates of exchange ruling at the date of the
statement of financial position.
Non-monetary items expressed in foreign currencies held at fair value are
translated into sterling at rates of exchange ruling at the date the fair
value is measured. Transactions in foreign currency are converted to sterling
at the rate ruling at the date of the transaction. Exchange gains and losses
are taken to the income statement as a capital or revenue item depending on
the nature of the underlying item.
h) Cash and cash equivalents comprise cash and demand deposits which are
readily convertible to a known amount of cash and are subject to insignificant
risk of changes in value.
i) Dividends payable - under FRS102 dividends should not be accrued
in the financial statements unless they have been approved by shareholders
before the statement of financial position date. Dividends to equity
shareholders are recognised in the statement of changes in equity when the
shareholder's right to receive the payment is established. In the case of the
fourth interim dividend, this would be the ex-dividend date of 3 April 2025.
j) Called up ordinary share capital - represents the nominal value
of the issued share capital including shares held in Treasury. This reserve
is non-distributable.
The share premium account - when shares held in Treasury are reissued, the
excess of the sales proceeds over the weighted average price of repurchase is
allocated to the share premium account. This reserve is non-distributable.
The capital redemption reserve - represents the nominal value of the shares
bought back and cancelled. This reserve is non-distributable.
The capital reserve - gains or losses on realisation of investments and
changes in fair values of investments are transferred to the realised capital
reserve. Any changes in fair values of investments that are not readily
convertible to cash are treated as unrealised gains or losses within the
capital reserve. The capital element of the investment management fee and
relevant finance costs are charged to this reserve. Any associated tax
relief is also credited to this reserve. The realised portion of the capital
reserve is distributable by way of dividend and by way of share buybacks.
The revenue reserve - represents net revenue earned that has not been
distributed to shareholders. This reserve is fully
distributable.
k) Taxation - the charge for taxation is based upon the revenue for
the year and is allocated according to the marginal basis between revenue and
capital using the Company's effective rate of corporation tax for the
accounting period.
l) Deferred taxation - deferred taxation is recognised in respect of
all timing differences that have originated but not reversed at the statement
of financial position date where transactions or events that result in an
obligation to pay more or a right to pay less tax in future have occurred at
the statement of financial position date measured on an undiscounted basis and
based on enacted tax rates. This is subject to deferred tax assets being
recognised only if it is considered more likely than not that there will be
suitable profits from which the future reversal of the underlying temporary
differences can be deducted. Timing differences are differences arising
between the Company's taxable profits and its results as stated in the
accounts which are capable of reversal in one or more subsequent periods. Due
to the Company's status as an investment trust, and the intention to continue
meeting the conditions required to obtain approval as an investment trust in
the foreseeable future, the Company has not provided deferred tax on any
capital gains and losses arising on the revaluation or disposal of
investments.
m) Estimates - estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimates are revised and in any future periods affected. There
have been no significant judgements, estimates or assumptions for the year.
n) Bank loans are classified as financial liabilities at amortised cost.
Interest and fees payable on the bank loan are accounted for on an accrual
basis in the statement of comprehensive income.
Note 2: Revenue
Year ended Year ended
31 January 2025 31 January 2024
£000 £000
Dividends from listed investments
UK equities 137 122
International equities 2,233 2,668
Other revenue
Interest on deposits 49 42
2,419 2,832
There were no capital dividends received during the year ended 31 January 2025
(2024: £nil).
Note 3: Other expenses
Year ended 31 January 2025 Year ended 31 January 2024
£000 £000
Directors' fees 145 147
Advertising and public relations 80 63
Audit fees 68 66
Professional, regulatory and listing fees 56 55
Registration fees 43 43
Recruitment fees 30 -
Depositary fees 25 29
Printing and postage 20 14
Directors' and officers' liability insurance 12 12
Custody fees 10 11
Legal fees 3 1
VAT recovered (15) (19)
Other 25 46
502 468
All expenses detailed above include VAT where applicable.
Note 4: Taxation on ordinary activities
Year ended 31 July 2025 Year ended 31 January 2024
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Overseas tax suffered 251 - 251 287 - 287
The applicable corporation tax rate for the year ended 31 January 2025 was
25.00% (2024: 24.03%). The tax charge for the year differs from the charge
resulting from applying the standard rate of corporation tax in the UK. The
differences are explained below.
Year ended 31 January 2025 Year ended 31 January 2024
£000 £000
Net return before taxation 17,668 26,364
Corporation tax at rate of 25.00% (2024: 24.03%) 4,417 6,335
Effects of:
UK dividends not taxable (34) (29)
Gains on investments not taxable (4,358) (6,159)
Overseas dividends not taxable (558) (641)
Overseas tax suffered 251 287
Increase in excess management and loan expenses 533 494
Total tax charge for the year 251 287
As at 31 January 2025, the Company had unutilised management expenses of £49
million (2024: £46 million) carried forward. Due to the Company's status as
an investment trust and the intention to continue to meet the conditions
required to obtain approval for that status in the foreseeable future, the
Company has not provided deferred tax on capital gains and losses arising on
the revaluation or disposal of investments.
Note 5: Returns per share
Year ended 31 January 2025 Year ended 31 January 2024
The returns and net asset value per Ordinary share are calculated with
reference to the following figures:
Revenue return £000 1,330 1,750
Capital return £000 16,087 24,327
Total return £000 17,417 26,077
Weighted average number of shares in issue during the year 66,047,646 73,994,270
Revenue return per share 2.01p 2.37p
Capital return per share 24.36p 32.87p
Total return per share 26.37p 35.24p
Note 6: Dividends
Year ended Year ended
31 January 2025 31 January 2024
£000 £000
Year ended 31 January 2023 - fourth interim dividend of 1.50p - 1,118
Year ended 31 January 2024 - fourth interim dividend of 1.50p 1,041 -
Year ended 31 January 2025 - first interim dividend of 0.90p (2024: 0.90p) 606 675
Year ended 31 January 2025 - second interim dividend of 0.90p (2024: 0.90p) 586 662
Year ended 31 January 2025 - third interim dividend of 0.90p (2024: 0.90p) 551 647
2,784 3,102
Revenue return per share for the year ended 31 January 2025 is 2.01p (2024:
2.37p), refer to note 5 for details of calculation.
The fourth interim dividend for the years ended 31 January 2024 and 31 January
2023 have been allocated to the realised capital reserve. The first, second
and third interim dividends for the years ended 31 January 2025 and 31 January
2024 have been allocated to the revenue reserve.
Set out below are the total dividends paid/payable in respect of the financial
year which forms the basis on which the requirements of s1158-1159 of the
Corporation Taxes Act 2010 are considered.
Year ended Year ended
31 January 2025 31 January 2024
£000 £000
First interim dividend of 0.90p for the year ended 31 January 2025 (2024:
0.90p)
606 675
Second interim dividend of 0.90p for the year ended 31 January 2025 (2024:
0.90p)
586 662
Third interim dividend of 0.90p for the year ended 31 January 2025 (2024:
0.90p)
551 647
Fourth interim dividend of 1.50p for the year ended 31 January 2025 (2024:
1.50p)
886 1,041
2,649 3,025
Note 7: Investments at fair value through profit or loss
Year ended 31 January 2025 Year ended 31 January 2024
£000 £000
Opening book cost 193,168 210,334
Opening investment holding gains 71,619 67,272
Opening market value 264,787 277,606
Additions at cost 93,479 80,424
Disposals proceeds received (145,418) (118,874)
Gains on investments 17,427 25,631
Market value of investments held at 31 January 230,275 264,787
Closing book cost 177,314 193,168
Closing investment holding gains 52,961 71,619
Closing market value 230,275 264,787
The Company received £145,418,000 (2024: £118,874,000) from investments sold
in the year. The book cost of these investments when they were purchased was
£109,333,000 (2024: £97,590,000).
The transaction costs in acquiring investments during the year were £75,000
(2024: £105,000). For disposals, transaction costs were £45,000 (2024:
£62,000).
Year ended 31 January 2025 Year ended 31 January 2024
£000 £000
Net realised gain on investments 36,085 21,284
Net change in unrealised gains/(losses) on investments (18,658) 4,347
Total capital gains/(losses) 17,427 25,631
Note 8: Trade receivables
As at 31 January 2025 As at 31 January 2024
£000 £000
Sales awaiting settlement 2,008 655
Taxation recoverable 303 296
Dividends receivable 28 11
VAT recoverable - 27
Other debtors 21 40
2,360 1,029
Note 9: Cash and cash equivalents
As at 31 January 2025 As at 31 January 2024
£000 £000
Sterling bank account 1,900 1,922
1,900 1,922
Note 10: Trade payables
As at 31 January 2025 As at 31 January 2024
£000 £000
Amounts falling due within one year:
Purchases awaiting settlement 1,777 -
Ordinary shares bought back awaiting settlement 227 584
Investment management fees 89 85
Interest accrued on bank loan - 130
Other payables 216 162
2,309 961
Bank loan(1) - 10,000
(1)On 23 November 2020, the Company entered into an unsecured three-year £10
million sterling term revolving loan facility with the Royal Bank of Scotland
International Limited ('RBSI'). This loan was drawn down in full on 23
November 2023. It was fully repaid and closed on 25 November 2024.
The facility agreement contained covenants that the adjusted investment
portfolio value at each month end should not be less than £120 million, the
gross borrowings should not exceed 30% of the Company's adjusted investment
portfolio value and the portfolio must contain at least 22 eligible
investments. The facility was shown at amortised cost.
Finance costs are charged to capital (80%) and revenue (20%) in accordance
with the Company's accounting policies.
Note 11: Ordinary shares of 5p
Year to Year to
Number of shares 31 January 2025 Number of shares 31 January 2024
£000 £000
Ordinary shares of 5p
Ordinary shares in issue at the beginning of the year 71,228,807 3,560 76,105,554 3,804
Ordinary shares issued from Treasury during the year - - 675,000 34
Ordinary shares bought back to Treasury during the year (10,546,133) (527) (5,551,747) (278)
Ordinary shares in issue at end of the year 60,682,674 3,033 71,228,807 3,560
Year to Year to
Number of shares 31 January 2025 Number of shares 31 January 2024
£000 £000
Treasury shares (Ordinary shares of 5p)
Treasury shares in issue at the beginning of the year 27,447,100 1,374 22,570,353 1,130
Ordinary shares issued from Treasury during the year - - (675,000) (34)
Ordinary shares bought back to Treasury during the year 10,546,133 527 5,551,747 278
Treasury shares in issue at end of the year 37,993,233 1,901 27,447,100 1,374
Total Ordinary shares in issue and in Treasury at the end of the year
98,675,907 4,934 98,675,907 4,934
For the financial year to 31 January 2025, the payments made for shares bought
back to Treasury was £39,184,000 (2024: the payments made for shares bought
back to Treasury less proceeds received for shares issued from Treasury was
£15,966,000).
Between 1 February 2025 and 15 April 2025, 2,060,649 Ordinary shares of 5p
were bought back to Treasury and no Ordinary shares of 5p were issued from
Treasury.
Note 12: Capital reserves
Unrealised investment holding gains
Realised capital reserve £000 Total capital reserve
£000 £000
As at 31 January 2024 156,688 71,619 228,307
Gains on realisation of investments at fair value 36,085 - 36,085
Movement in fair value gains of investments - (18,658) (18,658)
Realised currency gains during the year 4 1 5
Cost of shares bought back into Treasury (39,184) - (39,184)
Capital expenses (1,345) - (1,345)
Dividends paid (1,041) - (1,041)
As at 31 January 2025 151,207 52,962 204,169
Unrealised investment holding gains
Realised capital reserve £000 Total capital reserve
£000 £000
As at 31 January 2023 154,191 67,272 221,463
Gains on realisation of investments at fair value 21,284 - 21,284
Movement in fair value gains of investments - 4,347 4,347
Proceeds from the issue of shares from Treasury 1,940 - 1,940
Cost of shares bought back into Treasury (18,305) - (18,305)
Capital expenses (1,304) - (1,304)
Dividends paid (1,118) - (1,118)
As at 31 January 2024 156,688 71,619 228,307
The above split in capital reserve is shown in accordance with provisions of
the Statement of Recommended Practice 'Financial Statements of Investment
Trust Companies and Venture Capital Trusts 2022'.
Note 13: Net asset value per share
As at 31 January 2025 As at 31 January 2024
£000 £000
Net assets attributable to shareholders £232,226,000 £256,777,000
Number of shares in issue at the year end 60,682,674 71,228,807
Net asset value per share 382.7p 360.5p
Note 14: Related party transactions
With the exception of the investment management fees (as set out in the annual
report and accounts), Directors' fees (disclosed in the annual report and
accounts) and Directors' shareholdings (as set out in the annual report and
accounts), there have been no related party transactions during the year, or
in the prior year.
The amounts payable for Directors' fees as at 31 January 2025 are £40,037
(2024: £37,864).
Note 15: Financial instruments
The Company's financial instruments comprise securities and other investments,
cash balances, receivables and payables that arise directly from its
operations; for example, in respect of sales and purchases awaiting
settlement, and receivables for accrued income.
The Company also has the ability to enter into derivative transactions in the
form of forward foreign currency contracts, futures and options, for the
purpose of managing currency and market risks arising from the Company's
activities.
The main risks the Company faces from its financial instruments are (a) market
price risk (comprising (i) interest rate risk, (ii) currency risk and (iii)
other price risk), (b) liquidity risk and (c) credit risk.
The Board regularly reviews and agrees policies for managing each of these
risks. The AIFM's policies for managing these risks are summarised below and
have been applied throughout the year. The numerical disclosures exclude
short-term receivables and payables, other than for currency disclosures.
(a) Market price risk
The fair value or future cash flows of a financial instrument held by the
Company may fluctuate because of changes in market prices. This market risk
comprises three elements - interest rate risk, currency risk and other price
risk.
(i) Market risk arising from interest rate risk
Interest rate movements may affect the level of income receivable on cash
deposits.
The possible effects on fair value and cash flows that could arise as a result
of changes in interest rates are taken into account when making investment and
borrowing decisions. The Board imposes borrowing limits to ensure gearing
levels are appropriate and reviews these on a regular basis. Borrowings may
comprise fixed rate, revolving, and uncommitted facilities. Current
guidelines state that the total borrowings will not exceed 20% of the net
assets of the Company at the time of drawdown. On 23 November 2023, the
Company entered into an unsecured three-year £10 million sterling term
revolving loan facility and was drawn down in full. On 25 November 2024, the
facility was closed and repaid in full. The loan was shown at amortised cost
in the prior year.
Interest risk profile
The interest rate risk profile of the Company at the reporting date was as
follows:
As at 31 January 2025 As at 31 January 2024
Cash and cash equivalents 1,900 1,922
Bank loan - revolving facility - (10,000)
Total net exposure to interest rate risk 1,900 (8,078)
Interest rate sensitivity
The sensitivity analysis below has been determined based on the exposure to
interest rates for non-derivative instruments at the statement of financial
position date and the stipulated change taking place at the beginning of the
financial year and held constant throughout the reporting period in the case
of instruments that have floating rates.
If interest rates had been 1% (2024: 1%) higher or lower and all other
variables were held constant, the Company's profit for the year ended 31
January 2025 would increase/decrease by £19,000 (2024: increase/decrease by
£81,000).
This is mainly attributable to the Company's exposure to interest rates on its
floating rate cash balances and revolving credit facility.
(ii) Market risk arising from foreign currency risk
A significant proportion of the Company's investment portfolio is invested in
overseas securities and the statement of financial position can be
significantly affected by movements in foreign exchange rates. It is not
currently the Company's policy to hedge this risk.
The revenue account is subject to currency fluctuation arising on overseas
income.
Foreign currency risk profile
Foreign currency risk exposure by currency of denomination:
Year ended 31 January 2025 Year ended 31 January 2024
Total currency exposure Total currency exposure
£000 £000
US dollar 128,238 138,389
Euro 62,421 80,481
Swedish krona 13,235 24,521
Danish krone 9,821 6,752
Australian dollar 5,482 8,945
Swiss franc 5,466 -
Canadian dollar 4,788 -
Total overseas investments 229,451 259,088
Sterling 2,775 (2,311)
Total 232,226 256,777
The asset allocation between specific markets can vary from time to time based
on the portfolio manager's opinion of the attractiveness of individual stocks.
Foreign currency sensitivity
At 31 January 2025, if sterling had strengthened by 5% in relation to all
currencies, with all other variables held constant, total net assets and total
return on ordinary activities would have decreased by the amounts shown below.
A 5% weakening of sterling against all currencies, with all other variables
held constant, would have had an equal but opposite effect on the financial
statement amounts. The level of change is considered to be a reasonable
illustration based on the volatility of exchange rates during the year.
Year ended 31 January 2025 Year ended 31 January 2024
£000 £000
Total net sensitivity to foreign currencies 11,473 12,954
(iii) Market risk arising from other price risk
Other price risks (i.e. changes in market prices other than those arising from
interest rate or currency risk) may affect the value of the quoted
investments.
It is the Board's policy to hold an appropriate spread of investments in the
portfolio in order to reduce the risk arising from factors specific to a
particular country or sector. The allocation of assets to international
markets as detailed above, and the stock selection process both act to reduce
market risk. The investment manager actively monitors market prices throughout
the year and reports to the Board, which meets regularly in order to review
investment strategy. All investments held by the Company are listed on various
stock exchanges worldwide.
Other price risk sensitivity
If market prices at the statement of financial position date had been 30%
(2024: 30%) higher or lower while all other variables remained constant, the
return attributable to Ordinary shareholders at the year ended 31 January 2025
would have increased/decreased by £69,100,000 (2024: increase/decrease of
£79,400,000) and capital reserves would have increased/decreased by the same
amount. This level of change is considered to be reasonably possible based on
observation of market conditions and historic trends.
(b) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting
obligations associated with financial liabilities.
Liquidity risk is not considered to be significant as the Company's assets
comprise mainly readily realisable securities, which can be sold to meet
funding commitments if necessary.
(c) Credit risk
This is the risk of failure of the counterparty to a transaction to discharge
its obligations under that transaction that could result in the Company
suffering a loss.
The risk is managed as follows:
· investment transactions are carried out with a large number of
brokers, whose credit ratings are reviewed periodically by the portfolio
manager, and limits are set on the amount that may be due from any one broker;
and
· cash is held only with reputable banks with high-quality external
credit ratings.
The maximum credit risk exposure as at 31 January 2025 was £4,260,000 (2024:
£2,951,000). This was due to trade receivables and cash as per notes 8 and 9.
Fair values of financial assets and financial liabilities
All financial assets and liabilities of the Company are included in the
statement of financial position at fair value or a reasonable approximation of
fair value with no material difference in the carrying amount.
Note 16: Capital management policies and procedures
The Company's capital management objectives are:
• to ensure that the Company will be able to continue as a going concern;
• to maximise the return to its equity shareholders through an appropriate
balance of equity capital and debt; and
• to limit gearing to 20% of net assets at time of drawdown.
The Board monitors and reviews the broad structure of the Company's capital on
an ongoing basis. This review includes the nature and planned level of
gearing, which takes account of the portfolio manager's views on the market
and the extent to which revenue in excess of that which is required to be
distributed under the investment trust rules should be retained.
The capital of the Company consists of the equity reserves as shown on the
equity section of the statement of financial position and the bank loan as
disclosed in the liabilities section. On 25 November 2024, the facility was
closed and repaid.
Note 17: Fair value hierarchy
Under FRS 102, the Company is required to classify fair value measurements
using a fair value hierarchy that reflects the significance of the inputs used
in making the measurements. The fair value hierarchy shall have the following
levels:
• Level 1: quoted prices (unadjusted) in active markets for identical assets
or liabilities;
• Level 2: other significant observable inputs (including quoted prices for
similar investments, interest rates, prepayments, credit risk, etc);
• Level 3: significant unobservable input (including the Company's own
assumptions in determining the fair value of investments).
The financial assets measured at fair value through profit and loss are
grouped into the fair value hierarchy as follows:
Year ended 31 January 2025 Year ended 31 January 2024
£000 £000
Level 1 230,275 264,787
Net fair value 230,275 264,787
Note 18: Post balance sheet events
On 27 March 2025, the Board declared a fourth interim dividend of 1.50p per
share.
Effective 1 March 2025, the investment management fee will be amended to 0.40%
of the Company's NAV (excluding income).
Following the year end, global equity market volatility has been very high
after the introduction of widespread tariffs by the United States. Between
31 January 2025 and 15 April 2025, the net asset value of the Company fell
19.4% from £232,226,000 to £187,160,000. The cum-income NAV per share fell
16.6% from 382.7p to 319.3p.
Between 1 February and 15 April 2025, the Company bought back into Treasury
2,060,649 ordinary shares at an average price of 348.0p per share.
On 15 April 2025, the Company changed its name from Martin Currie Global
Portfolio Trust plc to Franklin Global Trust plc.
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